Wednesday, April 30, 2014

Time to look at the Antipodeans again | Pound strength or dollar weakness?

The Aussie and the Kiwi are
aligning themselves for a possible trade once again. As can be seen in the
four-hour chart above of the Australian dollar against the New Zealand dollar,
the initial stages of a downward trend might have come into being. We already
have the lower high (lower lows and lower highs define a downtrend) and seem
poised to achieve the lower low. All that stands in the way is 200 period
Simple Moving Average, which coincides with the support that is provided by the
last low.

Separately, on the
fundamental analysis front, the International Monetary Fund (IMF), in its
Regional Economic Review for Asia and the
Pacific, released on Monday, has indicated that it expects the Australian
economy to grow at a below-trend rate this year and next. At the same time it
has actually upgraded its growth forecasts for New
Zealand, on the basis of the post earthquake
reconstruction of Christchurch,
strengthening domestic demand and export growth.

Pound strength or dollar weakness?

The Pound Sterling against
the US dollar continues to move upward, as discussed in
yesterday’s commentary. This pair got a nice boost on the back of the
less-than-stellar US GDP figures that were released yesterday. These were no
doubt affected by the severe weather stateside during the quarter in question,
but they have consolidated the belief that rates in the US will remain
low for the foreseeable future, a fact once more reiterated by the FOMC after
its two-day meeting which concluded yesterday.

So is the rise of this pair
down to Sterling strength or US dollar
weakness, or perhaps a little of both?